How CRS Works in Panama: A Guide for Individuals and Entities

Executive Summary

Panama participates in the Common Reporting Standard (CRS), the international framework developed by the OECD for the automatic exchange of financial account information between participating tax jurisdictions.

Under Panama’s CRS framework, certain Panamanian financial institutions must identify the tax residence of their account holders, determine whether an account is reportable, collect specified financial information, and report that information to Panama’s tax authority. Panama may then automatically exchange the information with the tax authority of the relevant reportable jurisdiction.

Panama implemented CRS principally through Law 51 of October 27, 2016, supplemented by Executive Decree No. 124 of May 12, 2017 and subsequent regulations.

For international investors, the most important point is simple:

CRS is based primarily on tax residence—not nationality, the country where a company was incorporated, or the location of its assets.

A Panama corporation, LLC, private interest foundation, trust, or individual bank account is therefore not automatically reportable merely because it exists in Panama. The financial institution must determine the CRS status of the account holder and, where applicable, the persons controlling an entity.

Introduction

International banking has become increasingly transparent.

The Common Reporting Standard, commonly referred to as CRS, establishes a system through which participating jurisdictions automatically exchange information about certain financial accounts held by persons who are tax residents of another participating jurisdiction.

Panama formally established its domestic regulatory framework for automatic exchange of financial information through Law 51 of October 27, 2016. Reporting obligations are implemented primarily through Panamanian financial institutions, while the Ministry of Economy and Finance and the Dirección General de Ingresos (DGI) administer the reporting and exchange framework.

Understanding CRS is particularly relevant for:

• foreign individuals maintaining bank or investment accounts in Panama;

• owners of Panama corporations and LLCs;

• founders and beneficiaries of private interest foundations;

• international investors;

• trusts and investment structures;

• persons with tax residence in more than one jurisdiction; and

• businesses opening financial accounts in Panama.

CRS should not be confused with a tax itself. It is fundamentally an information-reporting and exchange system.

What Is the Common Reporting Standard?

The Common Reporting Standard was developed by the Organisation for Economic Co-operation and Development (OECD) to facilitate automatic exchange of financial account information between tax authorities.

Under CRS, participating jurisdictions establish relationships that permit financial account information to be exchanged automatically. The OECD maintains the international framework and information regarding activated exchange relationships.

In practical terms, the system generally operates as follows:

Account Holder → Panamanian Financial Institution → DGI / Panama Competent Authority → Foreign Tax Authority

The foreign authority receiving the information may then compare it with the information declared by its own taxpayers.

CRS therefore seeks to reduce opportunities for taxpayers to conceal financial assets outside their jurisdictions of tax residence.

Panama’s Legal Framework for CRS

Panama's CRS framework is principally based on:

Law 51 of October 27, 2016

Law 51 established the regulatory framework for implementing the exchange of financial information for tax purposes in Panama.

Executive Decree No. 124 of May 12, 2017

Executive Decree 124 regulates the due-diligence, classification and reporting procedures applicable under Law 51.

Multilateral Competent Authority Agreement

Panama participates in the international framework for automatic exchange of financial account information through the relevant international agreements and the Multilateral Competent Authority Agreement.

The OECD has previously concluded that Panama's international legal framework for CRS exchange relationships is in place.

Annual Reportable Jurisdictions

Panama determines the jurisdictions with which information is reportable for the applicable reporting period.

For the 2026 reporting cycle covering fiscal year 2025 information, Executive Decree No. 21 of May 27, 2026 adopted Panama's applicable list of reportable jurisdictions. The annex contains 91 jurisdictions.

Because this list can change, account holders and financial institutions should verify the applicable list for each reporting year rather than assuming that every foreign jurisdiction is automatically reportable.

Who Reports Information Under CRS in Panama?

CRS reporting obligations fall principally on Panamanian Reporting Financial Institutions.

CRS is not limited to traditional commercial banks.

According to Panama's DGI guidance, financial institutions potentially within the CRS framework include:

• depository institutions;

• custodial institutions;

• investment entities; and

• certain insurance companies offering cash-value or similar financial products.

Whether a particular institution qualifies as a Reporting Financial Institution must be determined under the definitions contained in Law 51 and its regulations.

Certain institutions may qualify as Non-Reporting Financial Institutions under specific exemptions.

How CRS Works for Individuals in Panama

For individuals, the central CRS question is generally:

Where is the person resident for tax purposes?

This distinction is important because CRS generally focuses on tax residence rather than nationality.

Panama's DGI expressly distinguishes CRS from FATCA on this point. CRS is generally residence-based, while FATCA has separate U.S. person rules that can include citizenship.

Example: Foreign Tax Resident With a Panama Bank Account

Assume an individual is tax resident in Spain and maintains a reportable financial account with a bank in Panama.

The bank may request a CRS self-certification identifying:

• the individual's tax residence;

• address;

• Tax Identification Number (TIN); and

• other required identifying information.

If Spain is an applicable reportable jurisdiction and the account satisfies the relevant CRS requirements, the financial institution may report the account information to Panama's DGI.

Panama may subsequently exchange that information with the Spanish tax authority.

Example: Panama Tax Resident

An individual who is genuinely tax resident only in Panama is not automatically treated as a foreign reportable person merely because they hold a Panamanian bank account.

However, the financial institution will still normally need sufficient documentation to determine the person's CRS status.

Multiple Tax Residences

Individuals can potentially be tax resident in more than one jurisdiction.

Where information held by the financial institution indicates more than one possible tax residence, additional documentation or a CRS self-certification may be required.

According to DGI guidance, CRS determinations are based on tax residence and the due-diligence procedures applicable to the account.

How CRS Works for Panama Companies and Other Entities

CRS analysis becomes more complex when the account holder is a legal entity.

A Panama corporation is not automatically reportable merely because it has foreign shareholders, and a foreign-owned entity is not automatically exempt either.

The financial institution must first determine the entity's CRS classification.

Broadly, an entity may fall into categories such as:

1. Financial Institution

2. Active Non-Financial Entity (Active NFE)

3. Passive Non-Financial Entity (Passive NFE)

The classification can materially change the reporting analysis.

Active NFE vs Passive NFE

For many operating companies, one of the most relevant distinctions is whether the business qualifies as an Active NFE or a Passive NFE.

Active NFE

An operating business earning predominantly active commercial income may generally fall within an Active NFE category, subject to the applicable legal tests.

Examples may include companies conducting genuine:

• consulting activities;

• manufacturing;

• logistics;

• retail;

• technology services; or

• other operating businesses.

The exact CRS classification depends on the facts and should not be determined solely by the company's corporate purpose.

Passive NFE

An entity may instead qualify as a Passive NFE where its income and assets are predominantly passive under the CRS tests.

Examples of passive income can potentially include certain:

• interest;

• dividends;

• investment income; and

• income generated from financial assets.

The classification is especially important because financial institutions may need to look through a Passive NFE to its Controlling Persons.

Controlling Persons and Beneficial Owners

One of the most misunderstood aspects of CRS is the treatment of entity owners.

Being a shareholder or beneficial owner of a Panama company does not by itself mean that the person's information is automatically exchanged under CRS.

Panama's DGI specifically notes that merely being the beneficial owner of a company is not, by itself, a reportable event because CRS concerns financial accounts.

However, the analysis changes where a financial account is held by a Passive NFE.

In that case, the financial institution may be required to identify the persons exercising control over the entity and determine their tax residences.

Consequently, if:

• a Panama company is classified as a Passive NFE;

• the company holds a financial account with a Reporting Financial Institution; and

• one of its Controlling Persons is tax resident in a reportable jurisdiction,

information relating to that account and the relevant Controlling Person may become reportable.

This distinction is critical for international corporate structures.

Panama Private Interest Foundations and CRS

A Panama Private Interest Foundation does not receive a universal CRS classification simply because it is organized as a foundation.

Its treatment depends on factors including:

• the nature of its activities;

• how its assets are managed;

• whether it qualifies as a Financial Institution;

• whether it qualifies as an NFE; and

• where relevant controlling persons are tax resident.

A foundation used primarily to hold investment assets may therefore require a more detailed CRS analysis than a straightforward operating company.

Investors should avoid assuming that a foundation, trust, corporation, or LLC is automatically either "reportable" or "non-reportable."

CRS classification is functional, not merely based on the legal form of the entity.

What Information Can Be Reported?

For a reportable financial account, information can include identification data and financial information.

Panama's DGI guidance identifies information such as:

• account holder's name;

• address;

• tax residence;

• Tax Identification Number (TIN);

• date of birth for individuals, where applicable;

• account number or functional equivalent;

• identification of the Reporting Financial Institution;

• year-end account balance or value; and

• depending on the type of account, certain interest, dividends, other income, or proceeds.

Where an entity account involves reportable Controlling Persons, information concerning those persons may also form part of the CRS report.

What Is a CRS Self-Certification?

Banks and other financial institutions frequently request a CRS self-certification when establishing a financial relationship.

The purpose is to allow the financial institution to determine the account holder's tax residence and CRS classification.

For an individual, the form will typically request information concerning:

• name;

• permanent address;

• jurisdiction or jurisdictions of tax residence;

• TIN; and

• date of birth.

For an entity, the process may also require:

• entity tax residence;

• CRS classification;

• business activity;

• identification of Controlling Persons; and

• CRS self-certifications from those persons where applicable.

A self-certification should be completed accurately. A person should not select Panama as a tax residence merely because they have a Panama company, bank account, property, or immigration status.

Corporate incorporation, immigration residence and tax residence are different legal concepts.

When Does Panama Report CRS Information?

Panamanian Reporting Financial Institutions generally submit CRS information annually.

Under the current framework, the reporting deadline is generally July 31 of the calendar year following the year to which the information relates.

The financial institution reports to Panama's competent authority through the designated DGI reporting system.

The information may subsequently be exchanged with the relevant foreign tax authority when the required exchange relationship and reportability conditions exist.

Reporting Financial Institutions remain responsible for compliance even where external compliance providers are used.

Does CRS Mean Panama Has Abandoned Territorial Taxation?

No.

This is an important distinction.

CRS and Panama's territorial income-tax system address different issues.

CRS determines whether certain financial account information must be collected and exchanged.

Panama's territorial taxation rules determine whether income is considered taxable in Panama.

Therefore:

Information being reportable under CRS does not automatically mean that the income is taxable in Panama.

Similarly, income that is not taxable in Panama does not necessarily prevent financial information from being reportable to another jurisdiction where the account holder is tax resident.

The taxpayer's obligations in the receiving country must be analyzed under that country's tax law.

CRS vs FATCA in Panama

Although banks often request FATCA and CRS information at the same time, they are separate frameworks.

Panama's DGI specifically distinguishes CRS as a multilateral automatic-exchange standard from FATCA's U.S.-specific framework.

Practical Considerations for International Investors

Individuals and entities using Panama for legitimate international business should treat CRS classification as part of normal banking and compliance planning.

Before opening or maintaining a financial account, consider:

1. Determine Your Actual Tax Residence

Do not confuse:

• citizenship;

• immigration residence;

• corporate domicile;

• physical address; and

• tax residence.

They can produce different legal consequences.

2. Determine the Entity's CRS Classification

A Panama corporation, LLC, foundation, or trust should understand whether it is classified as:

• a Financial Institution;

• an Active NFE; or

• a Passive NFE.

3. Identify Controlling Persons Correctly

Where a Passive NFE is involved, the tax residence of its Controlling Persons can be critical.

4. Keep Tax Information Current

Changes in:

• residence;

• address;

• ownership;

• control;

• entity activities; or

• tax identification

may affect the CRS analysis.

5. Do Not Structure Solely to Avoid CRS Reporting

Corporate structures should have legitimate commercial, investment, estate-planning, governance, or asset-management purposes.

CRS should be treated as a compliance consideration—not as a reason to create artificial structures designed to conceal beneficial ownership or financial accounts.

Frequently Asked Questions

Is every Panama bank account reported under CRS?

No.

Financial institutions apply CRS due-diligence procedures to determine whether an account is reportable. Tax residence, account type, entity classification and the applicable reportable jurisdiction are among the relevant factors.

Does having a Panama corporation make me reportable?

Not automatically.

The existence of a Panama company alone does not trigger CRS reporting. The analysis generally concerns financial accounts, the entity's CRS classification and, where applicable, its Controlling Persons.

Are shareholders automatically reported?

No.

Share ownership alone is not automatically a CRS-reportable event. However, Controlling Persons of certain Passive NFEs may become relevant to the reporting analysis.

Does Panama exchange information with every country?

No.

Panama maintains lists of jurisdictions applicable to CRS reporting and international exchange relationships. Those lists may change over time. For the 2026 reporting cycle covering fiscal year 2025, Panama adopted its current reportable-jurisdiction list through Executive Decree No. 21 of May 27, 2026.

Does CRS create a new tax?

No.

CRS is primarily an information-reporting and exchange framework. The tax consequences of the information depend on the laws applicable in the relevant tax jurisdiction.

Is CRS the same as FATCA?

No.

CRS is an OECD-based international system involving numerous participating jurisdictions. FATCA concerns U.S. tax compliance and operates under a separate legal framework.

Can a Panama Private Interest Foundation be subject to CRS?

Potentially.

Its treatment depends on its activities, asset-management structure, CRS classification and the status of relevant persons. Legal form alone does not determine the answer.

Conclusion

Panama forms part of the international system for the automatic exchange of financial account information under the Common Reporting Standard.

CRS does not make every Panama company, foundation or bank account automatically reportable. Instead, financial institutions must apply due-diligence procedures that consider factors including the account holder's tax residence, entity classification, financial account and, in certain cases, the tax residence of Controlling Persons.

For international investors, the central compliance principle is therefore not secrecy but accurate classification and consistent documentation.

A properly structured Panama entity can continue to serve legitimate purposes—including international business, investment, asset holding, succession planning and corporate governance—while operating within modern international tax-transparency standards.

References

• Dirección General de Ingresos — Common Reporting Standard (CRS): Law 51 of October 27, 2016, Executive Decree No. 124 of May 12, 2017, related resolutions and international agreements.

• Executive Decree No. 124 of May 12, 2017: Regulation of Panama's automatic exchange framework.

• Executive Decree No. 21 of May 27, 2026: Reportable jurisdictions applicable to the 2026 reporting cycle for fiscal year 2025.

• DGI — CRS Frequently Asked Questions: Guidance concerning Reporting Financial Institutions, tax residence and reportability.

• OECD — Automatic Exchange of Information: International CRS exchange relationships.